No Service Tax Payable On Amount Received By Automobile Dealer From Manufacturer As Trade Discount: Delhi CESTAT
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable on an amount received by an automobile dealer from the manufacturer as a trade discount.The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that any amount received by an automobile dealer from the manufacturer as a trade...
The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is payable on an amount received by an automobile dealer from the manufacturer as a trade discount.
The bench of Binu Tamta (Judicial Member) and P. V. Subba Rao (Technical Member) has observed that any amount received by an automobile dealer from the manufacturer as a trade discount, including a quantity discount (which is a trade discount given on the basis of volume of purchase), are not amounts received for providing any taxable service but purely discounts received on account of the trade and meeting certain sales targets.
The appellant/assessee is engaged in the sales and service of 'Renault cars'. It is registered with the central excise department for providing various services and has been paying service tax and filing returns as required.
The assessee received from the manufacturer various discounts for buying cars in bulk and meeting several sales targets. These amounts were recorded in its ledgers, copies of which were provided to the Commissioner during the hearing. A certificate from the CA was provided along with an undertaking by the DGM Finance of the manufacturer that the amounts given to the appellant are the discount or incentive based on the quantity purchased by the appellant. However, the commissioner confirmed the demand for the amount.
The assessee contended that incentives received from manufacturers of automobiles are trade discounts and not subject to service tax.
The tribunal, while allowing the appeal, held that the amounts cannot be charged to service tax and, therefore, the demand needs to be set aside.
Counsel For Appellant: Chartered Accountants Atul Gupta and Anmol Gupta
Counsel For Respondent: Anand Narayan
Case Title: M/S Divine Autotech Private Limited Versus Commissioner Of Central Tax
Case No.: Service Tax Appeal No. 53525 Of 2018